A leading economist has slammed Labour and National for using tax policies as a "cynical political ploy".
It comes as the US raises income thresholds for all tax brackets and increases the amount people can earn before they're taxed.
The top tax rate of 37 percent will apply to individuals with income exceeding US$578,125 and married couples filing jointly with incomes more than US$693,750. Both of those amounts are up 7 percent from 2022 to track with increases in the consumer price index, the Washington Post reported.
It comes amid calls for New Zealand to follow suit after Statistics New Zealand announced on Tuesday the annual consumer price index (CPI) recorded a slight 0.1 percent fall in the September quarter, defying many economists who predicted a more significant drop.
Annual inflation is currently sitting at 7.2 percent, down slightly from its June peak of 7.3 percent but significantly higher than the Reserve Bank of New Zealand's 1 to 3 percent target.
Leading economist Shamubeel Eaqub believes New Zealand should "absolutely" copy the US in raising the tax brackets to inflation.
"Our political parties want to make it seem like they're giving you tax cuts by adjusting the brackets, so it feels good," he told Newshub at 8pm host Rebecca Wright.
"But the reality is we are paying more taxes, our income is not going as far because of the rising cost of living. CPI is currently about 7 percent and if our index is increased by 7 percent, the average worker at $65,000 would be paying $500 less in tax."
National is proposing a similar policy but as a one-off change while Eaqub believes the brackets should be changed consistently.
National Party leader Christopher Luxon has previously promised to raise income tax thresholds to help Kiwis with the "cost of living crisis".
National would lift almost all of the brackets by just over 11.5 percent, to match the 11.5 percent increase in the cost of living over the last four years. For example, the 10.5 percent tax rate would be applied to each dollar earned up to $15,600, instead of $14,000.
National has also said it would scrap the top tax bracket of 39 percent for income over $180,000 a year.
The most typical salary in New Zealand is about $55,000, according to the Average Salary Survey. Those earning $55,000 would save about $800 a year if National's tax changes were applied. But someone earning $45,000 would only get about $112.
The Prime Minister told AM last week Labour hasn't created its election policy on tax issues yet.
Eaqub said both parties need to step up and adjust the brackets over time rather than just at the election.
"I think it's actually unfair the Government gets the benefit of the rising cost of living through higher taxes. That should always be adjusted over time and what it has become is a cynical political ploy on both sides," he said.
"They don't want to do anything during the years between elections and they want to adjust the tax brackets when the election is near because it makes it seem like they're giving you a great gift, but in reality, all they're giving you back is the cost of inflation of the last three years."
Eaqub said New Zealand should be focused on the structure of taxes rather than the political games both parties are playing.
"Are we paying enough taxes on wealth? Do we have the right amount on GST? Do we have the right balance on the taxes on income?
"Instead, what we tend to find is this kind of this lolly scramble when the election year comes, which will happen next year ... I think it's entirely cynical, and I think it's far too convenient for them to do this."
Watch the full interview with Shamubeel Eaqub above.
